Friday, December 27, 2013

Iowa and the Medicaid Trap

Washington and Oregon have noted the "Medicaid Trap," which threatens sole proprietorships and family farms in states which have expanded Medicaid. I had hoped that Iowa, Arkansas, and Utah might dodge this bullet because those three states are trying to provide actual insurance for low income citizens rather than enroll them in Medicaid as such. I contacted the Iowa Department of Human Services to find out more.

Unfortunately, the news goes from bad to worse. First, Iowa's low-income citizen remain subject to Medicaid's estate recovery rule. Congress required every state to recover the costs of "long-term care and related Medicaid expenses" from the estates of Medicaid recipients who died after the age of 55, and Iowa's novel approach to providing coverage to low-income citizens does not get around that.

Unfortunately, Iowa recovers all medical expenses, not just "long term care" and expenses directly attributed to such care. According to a personal email I just received from DHS,

Estate
recovery applies to those persons who receive assistance funded by Medicaid who
are 55 years of age or older. Iowa law does not limit the recovery of Medicaid
expenditures to long-term care and related Medicaid expenses, as Iowa applies
this program equitably to all Medicaid members who meet the requirements of
federal law.

What this means is that many family farms across Iowa are now threatened by any medical event. If Iowans had been given more time get ready, the new law might not affect them much, but federal law imposes a five-year "look back" rule to keep Medicaid recipients from hiding their assets. That means Grampa and Nana can't just deed the farm over to the next generation--they have to stay out of the hospital for five years if they want to keep the farm in the family.

Here's one silver lining for Iowa farmers. Iowa Senator Charles Grassley asked Senator Max Baucus to make sure that several well-established Christian healthcare sharing ministries could continue to operate, and 26 USC 5000A(d)(2)(b) expressly recognizes their right to exist. Samaritan Ministries, Christian Healthcare Ministries, and Medi-Share all help non-smoking, church-going Christians pay their bills by sharing medical costs among their members--and the cost of a monthly "share" is surprisingly low.

The next generation of Iowa farmers may choose to help Mom and Dad sign up for healthshare for the next five years. That way they may be able to pay their medical bills and keep the family farm!